That’s what we examine here: What is cryptocurrency actually good for?
When it comes to cryptocurrencies, there are two camps. There are those who believe that cryptocurrency is nothing more than a fad that will disappear. On the other hand, there is the louder camp that extols the benefits of crypto and its impact on finance, and they have good reason to do so.
But is there truth in their predictions? And how much truth is there? Of course, there is obviously some power in technology and the asset class if a wide range of people enter the market. Some of the biggest brands and companies in the world are also in technology and ancillary applications.
Can Crypto Actually Be Used for Something?
It is difficult to summarize the extremely diverse development space in the cryptocurrency industry, but here are a few examples. Thanks to decentralized finance (DeFi) technology, anyone can get loans against collateral. Decentralized cab ordering apps compete with Uber’s decentralized power distribution networks. Almost all interactions can be decentralized, and some industries, such as finance, supply chain, medicine and real estate, can benefit more than others. In addition to these benefits, there are several others.
1. Low-Cost Money Transfers
Finance is such a popular application because cryptocurrency allows you to make transactions at a very low cost – under normal circumstances. That’s why financial institutions are exploring the technology themselves. SWIFT may not last very long at the rate the crypto industry is moving.
Transaction fees were once a concern for Bitcoin, but that too has been assuaged as the average fee hovers around $1 as of September 2022. This is especially useful for international transfers, as international transfer fees traditionally average at 2% to 4%.
You can transfer a million dollars to someone on the other side of the world almost instantly and at the lowest cost, such as when a $98.3 million bitcoin transaction was transferred for just $3.3.
2. Making Purchases
This leads to another widely advertised use case that is not as successful as cross-border transfers: everyday shopping. Shopping is an app that is growing in popularity, and some major retailers already accept cryptocurrency.
Microsoft, The Home Depot and Newegg are just some of the companies that have been involved in cryptocurrency purchases. People can use cryptocurrency to buy groceries at Whole Foods and hardware at The Home Depot.
However, the idea of using cryptocurrency daily to buy products has several hurdles to overcome, namely the volatility of the asset class, government control, and the technical ability to process such transactions at scale.
Cryptocurrency can also be used as an asset to store wealth, protect against inflation, and as a means to buy real estate. Several companies have launched trading platforms that allow users to buy real estate for cryptocurrency. There are no middlemen, resulting in savings for buyers and sellers. Another useful benefit is shared ownership, which can lower the barrier to entry into real estate ownership.
3. Earning Interest
Cryptocurrency accounts have become a growing trend, allowing users to earn from their cryptoassets that would otherwise be idle. These accounts simply charge a fixed rate that varies depending on the asset, and rewards are automatically credited to the account.
For example, Binance has the Binance Earn service, which also offers both flexible and fixed rate features. Users can use a token such as Cardano (ADA) and earn interest over time.
4. Online Booking
The hospitality industry is also warming up to cryptocurrencies. It allows users to book hotels and buy tickets quickly and easily. One platform that allows this is Travala, which has more than 3 million travel products worldwide. You can book lodging, flights, and travel activities using cryptocurrencies, and most major assets are supported.
Charity has become another unexpected use of cryptocurrencies, and many platforms have been developed specifically for this purpose. Some people use cryptocurrencies for charity because they provide more privacy and the payment method is quick and easy.
Ukraine has received more than $100 million in cryptocurrency donations, and President Vladimir Zelensky said this could be a “breakthrough from an economic point of view. Another example is The Giving Block, a platform with thousands of nonprofits where users can donate cryptocurrency.
What is cryptocurrency?
A cryptocurrency is a digital currency, which is an alternative form of payment created using encryption algorithms.
What are NFTs?
Non-fungible tokens (NFTs) are type of blockchain-held token that represents a physical or digital asset. We have an article “How to create an NFT“. Check it for more information.
What is blockchain?
Blockchain is a digitally distributed, decentralized public ledger that exists on a network.